Brazil upgrades its Arbitration Law to foster its development

The committee set up by the Brazilian Senate in March 2013 to amend Arbitration Law 9.307/1996 has just completed its work with the unveiling of a bill to reform the Arbitration Law as well as the Corporations Law (Law 6.404/1976) in order to address the issue of corporate arbitration.

Since its approval, the Arbitration Law has made a decisive contribution to the development of arbitration in Brazil, with exponential growth in arbitration cases being observed since then. Indeed, in 2012, Brazil was ranked fourth in the world in terms of the number of arbitration cases with Brazilian parties submitted to the International Court of Arbitration of the International Chamber of Commerce, the principal arbitration forum worldwide, compared to being ranked 30^th in 1997.

However, despite the merits of the Law, the years since its approval have shown a need to improve it and round it off.

The most notable proposed amendments suggested by the committee include those seeking to extend the scope of application of arbitration. To such end, the amendments recognize the ability of the public authorities to submit disputes relating to property rights arising from contracts entered into with them to arbitration. In the area of labor and employment, they introduce the possibility of submitting disputes arising from employment contracts to arbitration in the case of directors or senior managers.

Another significant amendment relates to the power of the parties to appoint arbitrators. It is proposed, in the case of institutional arbitrations, to permit the disapplication of any provisions of the arbitration regulations of the arbitral body or specialist entity that limit this power.

Equally important are proposed amendments to acknowledge that commencement of an arbitration proceeding will toll the limitation period and to regulate conservatory and urgent measures, enabling the parties to petition a court of law prior to the commencement of the arbitration.

Last but not least, are measures aimed at encouraging the study of arbitration as an institution by attributing obligations in this regard to the Ministry of Education (“Ministério de Educação”), the National Justice Council (“Conselho Nacional de Justiça”) and the National Council of the Public Prosecution Service (“Conselho Nacional do Ministério Público”).

Together with the amendment of the Arbitration Law, amendments to the Corporations Law are also being considered with a view to regulating corporate arbitration, recognizing the possibility of including an arbitration clause in corporate bylaws, subject to certain requirements.

The bill will be subject to the pertinent legal formalities for its approval.